The market which had declined yesterday ahead of the Reserve Bank
of India's annual monetary policy review, bounced back today after
the central bank kept interest rates unchanged. Rate sensitive
banking, auto and realty stocks surged. IT stocks surged after the
Finance Minister extended tax exemption for the IT sector by a
year. Metal stocks rose. The market breadth was strong.
The central bank raised the cash reserve ratio (CRR) by 25 basis
points and the stance of its monetary policy was hawkish. The
market had witnessed a bout of volatility earlier in the day ahead
of monetary policy announcement.
Asian markets which opened before Indian market were mixed.
European markets which opened after Indian markets were mixed.
The 30-share BSE Sensex jumped 362.50 points or 2.13% at 17,378.46.
Sensex hit a high of 17,424.94 in late trade, its highest level in
two months. At the day's high, Sensex rose 408.98 points. Sensex
hit a low of 17011.60 in mid-morning trade. At day's low Sensex
fell 4.36 points.
The broader based S&P CNX Nifty was up 105.85 points or 2.08% at
5,195.50
From a recent low of 16698.04 on 23 April 2008, Sensex has gained
680.42 points or 4.07% to 17378.46 on 29 April 2008. From a low of
14809.49 on 17 March 2008, Sensex has risen 2568.97 points or
17.34%. The barometer index is off 3828.31 points or 18.05% from a
all time high of 21206.77 struck on 10 January 2008.
The turnover on BSE stood at Rs 7262 crore as compared to a
turnover of Rs 5544.33 crore on Monday, 28 April 2008. Turnover in
NSE's futures & options (F&O) segment spurted to Rs 41,819.49
crore, as compared to Rs 25,459.22 crore on Monday, 28 April 2008.
Nifty May 2008 futures were at 5217.40, a premium of 21.90 points
as compared to spot closing of 5,195.50.
The CRR is the percentage of banks' deposits which they must keep
as cash with the central bank. It may be recalled that RBI had
earlier this month announced a two-stage rise in CRR to 8%.
The Reserve Bank of India (RBI) said managing liquidity would
continue to receive priority in its policy objectives and warned it
would act swiftly to curb any signs of adverse developments in
inflation expectations.
RBI has forecast economic growth of 8% to 8.5% in the fiscal year
that began this month, after an estimated 8.7% growth in 2007/08.
RBI said it aims for inflation of around 5.5% this fiscal year with
the goal of lowering it close to 5% as soon as possible.
The market breadth was strong on BSE with 1588 shares advancing as
compared to 1121 that declined. 61 remained unchanged.
The BSE Mid-Cap index rose 1.13% to 7146.95 and BSE Small-Cap index
rose 0.87% to 8,785.31.
BSE Realty index (up 5.9% to 8,650.24), BSE Metal index (up 3.64%
to 16192.97), BSE IT index (up 5.24% to 4237.81), BSE Consumer
Durables index (up 2.81% to 4585.97), outperformed Sensex.
BSE Oil & Gas index (up 2.02% to 11661.26), BSE Bankex (up 1.68% to
8,964.75), BSE PSU index (up 1.65% to 8008.99), BSE Auto index (up
1.52% to 4,646.62), BSE Capital Goods index (up 1.28% to 13931.17),
BSE HealthCare index (up 0.78% to 4,248.62), BSE Power index (up
0.96% to 3,336.34) and BSE FMCG index (up 0.52% to 2,412.61)
underperformed Sensex
As per the provisional figures, foreign institutional investors
(FII)s bought shares worth Rs 232.18 crore today 29 April 2008 and
domestic funds bought shares worth Rs 403.27 crore.
Realty stocks surged in late trade. Indiabulls Real Estate (up
3.06% to Rs 557.35), DLF (up 8.57% to Rs 725.85) and Unitech (up
8.18% to Rs 317.50) rose.
IT stocks surged. Satyam Computer Services (up 8.22% to Rs 479.35),
Infosys (up 5.15% to Rs 1,750.75), Wipro (up 4.7% to Rs 479.20) and
Tata Consultancy Services (up 3.15% to Rs 910.80) edged higher.
Finance Minister Palaniappan Chidambaram extended by a year a tax
holiday scheme for export-driven software companies as he outlined
some changes to the federal budget for 2008-09. The scheme for
facilities based in technology parks was set to expire in March
2009.
Metal stocks rose. Tata Steel (up 4.01% to Rs 808.90), National
Aluminium Company (up 4.37% to Rs 458.70), Hindalco Industries (up
6.44% to Rs 198.20), Steel Authority of India (up 2.08% to Rs
179.40), Sterlite Industries (up 4.77% to Rs 898.85) edged higher.
Finance Minister P Chidambaram today said government will impose
export tax on basmati rice and some steel products, and cut import
duties on key inputs like ferro alloys and metallurgical coke. He
said the measures were being taken to improve domestic supplies and
to moderate prices.
Banking stocks surged after the RBI's policy announcement. State
Bank of India (up 3.27% to Rs 1,793.50), HDFC Bank (up 1.95% to Rs
1,547.50) and ICICI Bank (up 0.71% to Rs 901.30) edged higher.
Auto Stocks edged higher. Mahindra & Mahindra (up 1.17% to Rs
642.70), Tata Motors (up 1% to Rs 639.95) Maruti Suzuki India (up
1.24% to Rs 731.30), Hero Honda Motors (up 5.34% to Rs 861.85),
rose.
HDFC (up 5.95% to Rs 2881.45), Larsen & Toubro (up 2.09% to Rs
3007.40) Jaiprakash Associates (up 5.95% to Rs 266.10), Ambuja
Cements (up 1.32% to Rs 114.85), Bharat Heavy Electricals (up 1.29%
to Rs 1891.85), Reliance Industries (up 2.35% to Rs 2,653) edged
higher from Sensex pack.
Hindustan Unilever rose 1.48% to Rs 250.85. Net profit of Hindustan
Unilever declined 3.04% to Rs 380.95 crore on 19.14% rise in sales
to Rs 3793.94 crore in Q1 March 2008 Q1 March 2007. The board of
the company has approved the change in the financial year to
April-March.
Reliance Communications declined 1.73% to Rs 574.70 while Bharti
Airtel fell 2.67% to Rs 904.50. Reliance Communications said on
Monday, 28 April 2008, it would offer unlimited national long
distance calls within its network for a fixed rental with immediate
effect. Earlier yesterday, sector leader Bharti Airtel slashed long
distance and roaming tariffs by 43% effective 30 April 2008.
Reliance Natural Resources clocked the highest volume of 2.15 crore
shares on BSE. Ispat Industries (1.71 crore shares), IFCI (1.56
crore shares), Indiabulls Securities (1.51 crore shares) and
Reliance Petroleum (1.47 crore shares) were the other volume
toppers in that order.
Reliance Capital clocked the highest turnover of Rs 317.11 crore on
BSE. Sesa Goa (Rs 309.43 crore), Reliance Petroleum (Rs 295.31
crore), Reliance Natural Resources (Rs 270.24 crore) and Reliance
Industries (Rs 231.64 crore) were the other turnover toppers in
that order.
It its latest report on macroeconomic and monetary developments in
2007/08 released on Monday, 28 April 2008, RBI has said that the
global food prices were likely to remain firm as supply side
pressures did not appear to be abating. The central bank said steps
takes by the government to rein in prices should help curb
inflation. It, however, said the inflation risks on account of oil
prices remain incipient.
RBI has noted that freely priced fuel items such as naphtha had
increased substantially since February 2007 alongside rising global
oil prices, while prices of petrol and diesel, which are
government-controlled, had partially adjusted. But prices of
kerosene and cooking gas had not been raised by the government for
several years.
RBI felt there were some demand-side pressures. Domestic iron and
steel prices saw a sharp increase in line with recent hardening in
international steel prices, it said, while cement price rises could
be attributed largely to strong demand from construction
domestically. A survey of professional forecasters by the central
bank showed that the Indian economy is expected to grow 8.1% in the
2008/09 fiscal year that began this month. In 2007/08, the gross
domestic product is estimated to have grown 8.7%.
A cause for concern is the fall in business confidence index. A
survey of 392 companies by Federation of Indian Chambers of
Commerce and Industry (FICCI), showed that concerns about an
economic slowdown, inflation and rising costs hurt business
confidence of Indian firms during October-December 2007 period. The
FICCI business confidence index declined to a new five-year low of
55.3 points in the third quarter of 2007/08, from 61.2 in the
previous quarter.
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